Correlation Between Otokar Otomotiv and Turk Traktor

Can any of the company-specific risk be diversified away by investing in both Otokar Otomotiv and Turk Traktor at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Otokar Otomotiv and Turk Traktor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Otokar Otomotiv ve and Turk Traktor ve, you can compare the effects of market volatilities on Otokar Otomotiv and Turk Traktor and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Otokar Otomotiv with a short position of Turk Traktor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Otokar Otomotiv and Turk Traktor.

Diversification Opportunities for Otokar Otomotiv and Turk Traktor

0.49

Correlation Coefficient

Otokar Otomotiv  Turk Traktor

Very weak diversification

The 3 months correlation between Otokar and Turk is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Otokar Otomotiv ve and Turk Traktor ve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turk Traktor ve and Otokar Otomotiv is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Otokar Otomotiv ve are associated (or correlated) with Turk Traktor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turk Traktor ve has no effect on the direction of Otokar Otomotiv i.e., Otokar Otomotiv and Turk Traktor go up and down completely randomly.

Pair Corralation between Otokar Otomotiv and Turk Traktor

Assuming the 90 days trading horizon Otokar Otomotiv ve is expected to under-perform the Turk Traktor. In addition to that, Otokar Otomotiv is 1.27 times more volatile than Turk Traktor ve. It trades about -0.1 of its total potential returns per unit of risk. Turk Traktor ve is currently generating about -0.05 per unit of volatility. If you would invest  78,780  in Turk Traktor ve on September 21, 2024 and sell it today you would lose (7,730) from holding Turk Traktor ve or give up 9.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Otokar Otomotiv ve  vs.  Turk Traktor ve

Otokar Otomotiv ve

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Otokar Otomotiv ve are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Otokar Otomotiv may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Turk Traktor ve

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Turk Traktor ve are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Turk Traktor is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Otokar Otomotiv and Turk Traktor

The main advantage of trading using opposite Otokar Otomotiv and Turk Traktor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Otokar Otomotiv position performs unexpectedly, Turk Traktor can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Turk Traktor will offset losses from the drop in Turk Traktor's long position.

The idea behind Otokar Otomotiv ve and Turk Traktor ve pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.